You’ve probably heard by now that President Obama announced an executive order on Labor Day requiring government contractors to give workers sick leave in addition to vacation and fringe benefits already required by the Service Contract Act and Davis Bacon Act. That executive order would entitle employees of government contractors to earn up to 7 days or more of paid sick leave annually, including paid leave allowing for family care. (Executive Order 13706, 80 Fed. Reg. 54,697)
Before you change your policy, stop and take a deep breath.
Whenever the President speaks about an issue affecting employers or government contractors, those employers and contractors want to know immediately what they need to do to comply. It’s good to be prudent and to make sure you are complying with all legal requirements that apply to your operation. At the same time, it’s important to understand that executive orders rarely contain requirements that you have to comply with the next day. In fact, the process by which an executive order becomes a binding requirement is nearly as ugly as the process of making sausage.
The sick leave executive order is not self-implementing. Rather, the order directs the Department of Labor to issue regulations “necessary and appropriate to carry out this order.” The order says that those regulations may include “exclusions from the requirements set forth in this order where appropriate.” That alone is a process that takes many months, as it entails coming up with proposed regulations, publishing the proposed regulations in the Federal Register, allowing at least 60 days for public comments, reviewing the public’s comments on the proposed regulations, and publishing final regulations. Concurrently with that process, the government officials who maintain the Federal Acquisition Regulation (FAR) also will publish proposed changes to the FAR, collect and review public comments, and publish a final amendment to the FAR, including an appropriate contract clause. If DOL and the FAR Council have disagreements, which happens sometimes, they will have to negotiate them or seek mediation within the government.
Given all those steps, it’s no wonder that President Obama ordered that the sick leave requirement apply only to new contracts where the solicitation for such contract has been issued after January 1, 2017. It will be a long time before this executive order requires you to do anything, and that’s why you don’t need to rush into making changes to your policies. Indeed, if an agency tries to apply this policy to existing contracts, contractors should look carefully at whether they are entitled to contract price adjustments.
You might ask: what’s wrong with getting a jump on implementing sick leave? There are two things wrong with that. First, if you implement the “requirement” before the regulations define it, you might do it incorrectly. Second, if you voluntarily pay benefits not required by the contract, you may forfeit any right you may have to ask your government customers for a price increase.
So, be prudent, ask questions, and understand your obligations. But don’t panic, and don’t worry that you are not complying with a new sick leave requirement that doesn’t really exist yet!